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Second Circuit: Copyright registration is a jurisdictional requirement
December 03, 2007

Last week, the Second Circuit issued a decision addressing whether the registration requirement for bringing a copyright action was jurisdictional or merely a "claim processing" rule. The decision turned on whether the Supreme Court's decision in Eberhart v. United States reduced the class of "jurisdictional" statutes such that 17 U.S.C. § 411(a) should be considered a "claim processing" rule. The majority, following the First, Fourth, Fifth, Sixth, Tenth, and Eleventh Circuits, held that the requirement was jurisdictional, and that all members of the class had to have registered their works for the district court to have jurisdiction. The dissent—focusing instead on statutory language, legislative history, jurisdictional exceptions, and exceptions for foreign works—argued that the requirement was merely a claim processing rule.

Update (12/4): This holding arguably conflicts with the Ninth Circuit's decision in Perfect 10, Inc. v. Google, Inc. (opinion here, amended opinion released yesterday here). In footnote 1 of that opinion, the Ninth Circuit held that as long as the plaintiff has at least one registered copyright, a district court had jurisdiction to enjoin infringement of the plaintiff's registered and unregistered copyrights, because "section 411 does not limit the remedies a court can grant." While the case was also factually distinguished by the Second Circuit in this case, the nature of the § 411 registration requirement is one that would benefit from clarity, either from Congress or the Supreme Court.

More on In re Literary Works in Electronic Databases Copyright Litig. after the jump.

This case is a bit of a judicial aftershock stemming from the Supreme Court's decisions in New York Times Co. v. Tasini (holding that publishers need specific authorization to electronically publish works and can not rely on permission to use the works in print publications) and Eberhart v. United States (urging courts to more carefully distinguish between true jurisdictional bars and "claim processing" rules that may be waived).

The case is a consolidation of four previous class actions stemming from freelance writers who contracted with publishers regarding print media, but retained the copyrights. The works were eventually published online and were also indexed and stored by electronic database services. The writers brought suit for violation of their copyright as 1) the original publishers did not contract for the electronic publication rights, and 2) the licenses obtained from the publishers by the database services were not valid as the publishers did not have the right to grant them.

The cases were stayed pending the result in Tasini; after that opinion was published, the parties began mediation. At mediation, the defendant's argued that there was no jurisdiction as 17 U.S.C. § 411(a) states that "no action for infringement of the copyright in any United States work shall be instituted until registration of the copyright claim has been made in accordance with this title."

Notwithstanding the jurisdictional issue, the parties reached a settlement agreement that split the claimants into three groups. Category A consisted of the claimants that had registered their works before any infringement; these claimants were entitled to a flat fee. Category B consisted of claimants that had registered their works after infringement, but before the suit was filed; these claimants were entitled to the greater of a flat fee or a percentage of the original price of the work. Category C consisted of claimants that had either registered their works after the suit was filed or had not registered their works at all; this class was entitled to either a flat fee or a percentage of the original price of the work with the amount available to this category adjusted (potentially to zero) dependent on the availability of funds.

The settlement was presented to the court for class certification and settlement approval. While objections to the proposed settlement were filed by various Category C plaintiffs, the court approved the settlement. The objectors appealed. On appeal, The Category C claimants then appealed claiming that the settlement was inadequate and unfair because "they were paid little and singled out for reduction if the total claims exceeded $18 million." The defendants responded that the Category C claimants "were adequately represented and treated fairly because their claims were essentially worthless" due to the fact that they had not registered their copyrights. The appeals court raised the jurisdictional issue sua sponte, and vacated and remanded after finding that the court lacked jurisdiction to certify the class and approve the settlement.

The majority first determined that the district court did not have jurisdiction over the claims for the unregistered works by holding that § 411(a)'s requirement of registration was jurisdictional. The majority first determined that the precedent of the circuit precluded a holding otherwise as the Second Circuit, as well as several other circuits, had previously upheld dismissals for lack of subject matter jurisdiction for failure to meet § 411(a). Second, the majority determined that Eberhart did not cast doubt on this precedent as Eberhart dealt with "a time limit for moving in a case that undoubtedly already falls within the district majority's subject matter jurisdiction" while "section 411(a) creates a statutory condition precedent to the suit itself." Given these considerations, the majority held that there was no subject matter jurisdiction over the claims.

The court then considered whether or not every member of the class had to meet the jurisdictional requirement. The majority noted that Rule 23 does not alter the subject matter jurisdiction of the district court. For example, in previous cases, all members of a class have been held to be required to meet Article III requirements, the amount-in-controversy requirement for diversity cases (until there was Congressional action to the contrary), and, if applicable, have exhausted their administrative remedies. Based on these cases, the court held that the registration requirement had to be met by every member of the class for there to be subject matter jurisdiction.

Finally, the court considered whether supplemental jurisdiction could cure the jurisdictional defects. The court noted that 28 U.S.C. § 1367(a) "excepts from its reach those cases in which another federal statute denies jurisdiction." Finding that § 411(a) denied federal courts jurisdiction over claims involving unregistered copyrights, the court concluded that there was no basis for jurisdiction and the class certification and settlement approval was therefore improper, as the district court lacked subject matter jurisdiction.

The dissent argued there was subject matter jurisdiction. The dissent would have held that § 411(a) is merely a "claim processing" requirement. In considering the statutory language, the dissent noted that § 411(a) does not speak in jurisdictional terms, as it was not a rights-creating statute but was merely an enforcement mechanism. Turning to the legislative history, the dissent noted that the House Report on the bill explicitly stated that "registration is not a condition of copyright protection." Then the court noted that there are multiple jurisdictionally recognized exceptions to § 411(a) including that "courts routinely permit plaintiffs to file suit before applying for a copyright or while the Copyright Office is considering their application," which was inconsistent with the rule that "the jurisdiction of the court depends upon the state of things at the time of the action brought." Finally, the dissent noted that the explicit exception of foreign works showed flexibility inconsistent with § 411(a) being a jurisdictional statute.

This case provides further proof that early registration of copyrights is key, not only from a damages perspective, but also from a jurisdictional perspective. While some courts have permitted a case to proceed once an application for registration has been filed, the better course of action is to obtain a copyright registration before filing suit, lest the case be dismissed on jurisdictional grounds.

To read the full decision in In re Literary Works in Electronic Databases Copyright Litig., click here.

Bill Patry discusses the case on his blog here.

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